This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
The Net Asset Value of a company is a very conservative ‘worst-case’ valuation of what a business would be worth if it had to close down.
Net Asset Value calculation: Total Assets less Goodwill and other Intangible Assets less Liabilities.
Example: The Round Number CompanyTotal Assets = 300; Goodwill = 8; Intangibles = 20; Liabilities = 160 Net Asset Value of Business = 300 - 20 - 8 - 160 = 112 |
This is the amount of cash you would have if everything owned by the business was sold, and all debts were paid. It is a very conservative ‘worst-case’ valuation of what a business would be worth if it had to close down.
Be sure to ask, "What do you mean by that?" Any term which uses the phrase ‘net asset’ or ‘net assets’ must be examined closely. See Net Asset;
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.